Question

Crane Company sells office equipment on July 31, 2022, for $20,440 cash. The office equipment originally cost $82,640 and as of January 1, 2022, had accumulated depreciation of $38,770. Depreciation for the first 7 months of 2022 is $4,250. Prepare the journal entries to (a) update depreciation to July 31, 2022, and (b) record the sale of the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit (a) Depreciation Expense 4250 Accumulated Depreciation-Equipment 4250 (b) Cash 20440 Accumulated Depreciation-Equipment 38770 23430 Loss on Disposal of Plant Assets 82640 Equipment

Answer 1

Answer

· Journal entry [a] is CORRECT

· After Journal entry [a]
Accumulated Depreciation – Equipment balance will be = $ 38770 existing + $ 4250 [7 month depreciation]
= $ 43,020

· Journal entry [b]

Accounts title	Debit	Credit
Cash (Sold for)	$20,440
Accumulated Depreciation - equipment	$43,020
Loss on disposal of plant assets ($82640 - 20440 - 43020)	$19,180
Equipment (Cost)		$82,640